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Friday, October 28, 2016

Long-Haul Seaborne Chemical Shipping Undermined

May 15, 2014

Chemical tankship: File photo

Chemical tankship: File photo

Growing Paraxylene (PX) exports from North East Asia to China are contributing to the fast growth of intra-Asia coastal trade, but they are undermining long-haul seaborne trade, according to Drewry’'s recently published 'Chemical Forecaster' report.

China’s consumption of PX has emerged as a key driver of global Chemical shipping demand. Its annual PX import requirements tripled from 2.9 million tonnes in 2007 to 9.0 million tonnes in 2013, representing 21% annual growth over this period.

Meanwhile, the proportion of China’s total PX imports sourced from Northeast Asia, particularly South Korea, Japan and Taiwan, grew from 28% in 2009 to 73% in 2013, indicating that a large share of global seaborne PX is being traded within the coastal trade routes of Northeast Asia.

“One of the key implications of intra-Asia PX trade is weakened import requirements from other exporting regions, undermining demand for chemical tankers,” said San Naing, editor of Drewry’s Chemical Forecaster report.

South Korea, Japan and Taiwan are increasingly capturing PX export opportunities to China, undermining exports from other regions, particularly from the US and Middle East. The PX seaborne trade between China and the Middle East has weakened since 2011, while its trade with the US and Europe has stabilised. South Korea’s PX import requirements from the US and the Middle East have all but disappeared since 2012.

“China’s PX sourcing decisions are crucial drivers of future seaborne trade demand,” continued  Naing.
“Northeast Asian producers enjoy competitive advantage over other producers in the Middle East and the US because of their proximity to China and lower freight costs. If China opts to raise imports from Asia, it will adversely affect long-haul seaborne trade with other exporting regions.

With further PX production capacity coming on stream in South Korea and South East Asia, this trend is set to continue.”

“Source: Drewry Maritime Research

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